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while persons like Mrs. Riley would benefit from being freed of the hardships of deficiency judgments, they would not necessarily receive any actual monetary compensation for their investment, or for their efforts over the years to purchase homes.

It is suggested that more equal treatment and greater equity might be achieved, without distortion of the market value concept of compensation, if public agencies were authorized to purchase or condemn notes or other evidences of debt, as well as the real property-each at its market value. The Government would pay the full fee value of the property. Noteholders would receive the full market value of their notes, and could proceed to purchase other notes in the market. The purchase or condemnation of the notes by the Government would terminate the right of the lenders to claim continued interest. And the difference between the market value of the property and the market value of the notes would be paid to the property owner. This may be illustrated as follows:

Case I

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Present law

Noteholders. First trust note is paid in full including interest, second trust note is paid substantially in full, and the second and third trust noteholders are entitled to sue the property owner for deficiency judgments.

Property owner.- Property owner receives no cash payment and he is in debt for $3,000, plus interest on the notes to the dates of payment.

Effect of suggestion.-All noteholders would receive "just compensation”; i.e., the fair market value of their notes, or a total of $7,500, homeowner would be free from debt, and he would receive $500 for his equity.

Case II

Fair market value of real property at time of


Outstanding debt on notes secured by Fair market

trusts or mortgages at time property value of notes acquired

at time property

acquired Mortgage




2, 300

$3, 100
1, 100



5,800 upon

Present law

Note holders.—Notes are paid substantially in full.

Property owner.- Property owner receives no cash payment; however, he is free from debt, except for interest on notes to dates of payment. Effect of suggestion.-All noteholders would receive "just compensation”-i.e., the fair market value of their notes, or a total of $5,800 property owners would receive close to $2,200.

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Present lawo

Noteholders.-Noteholders are paid in full.

Property owners.-Property owner receives close to $1,100. Effect of suggestion. Noteholders would receive just compensation-i.e., the fair, market value of their notes, or a total of $5,000_ property owner would receive close to 2,600.


The broad powers of Congress over all aspects of land acquisition for Federal and federally assisted programs and the policies to be followed in the administration of such programs will be divided into four parts for the purpose of this discussion: Â. Constitutional authority to provide for the payment of com

pensation in excess of the "just compensation” requirement

of the fifth amendment. B. Constitutional authority to grant broad discretionary powers

to Government agency heads for the administration of pub

lic programs. C. Constitutional authority to declare public policy. D. Constitutional authority to impose conditions for grants of

funds in Federal and federally assisted programs.



It is well settled that Congress has the power to authorize payments for losses and damages which are not payable under the “just compensation" provision of the Fifth Amendment. This is based

the constitutional power of Congress to determine whether or not claims upon the Public Treasury are founded upon moral and honorable obligations, and upon principles of right and justice (United States v.

Realty Company, 163 U.S. 427, 444 (1896); Joslin Co. v. Providence, 262 U.S. 668, 676' (1923); Mitchell v. United States, 267 U.S. 341, 345 (1925); United States v. Willow River Co., 324 U.S. 499 (1945)).

In United States v. Willow River Co., supra, the Supreme Court said, in holding that the fifth amendment does not undertake to pay all losses suffered by property owners: “* * * If damages from any other cause are to be absorbed by the public, they must be assumed by act of Congress and may not be awarded by the courts merely by implication

from the constitutional provision * * *" (p. 502). Congress cannot, however, deprive a landowner of the minimum compensation required by the fifth amendment (United States v. New River Collieries Co., 262 U.S. 341, 343 (1923); Monongahela Navigation Co. v. United States, 148 U.S. 312, 327 (1893)). This is a judicial question in that all property owners are entitled to an ultimate judicial examination as to whether the congressional authorization for compensation to be paid for property taken is consistent with the minimum standards of the fifth amendment.

The Mitchell case makes clear the authority of Congress to authorize payment of losses due to the destruction of a business where land is acquired by either purchase or by the use of eminent domain powers. Therein, the landowners failed to recover for their business Iosses, although they could have been paid for such losses in a negotiated purchase. In denying recovery the Supreme Court said:

But it does not follow that, in the absence of an agreement, the plaintiffs can compel payment for such losses. To recover, they must show some statutory right conferred. States have not infrequently directed the payment of compensation in similar situations. The constitutions of some require that compensation be made for consequential damages to private property resulting from public improvements. Chicago v. Taylor, 125 U.S. 161; Richards v. Washington Terminal Co., 233 U.S. 546, 554. Others have, in authorizing specific public improvements, conferred the right to such compensation. Ettor v. Tacoma, 228 U.S. 148; Joslin Manufacturing Co. v. Providence, 262 U.S. 668. Congress had, of course, the power to make like provision here. Compare United States v. Řealty

Co., 163 U.S. 427 * * * (pp. 345, 346). The reference in the Mitchell case to the Joslin decision is highly significant as to the authority of Congress to authorize the payment of just compensation, and of State legislatures as well. The Rhode Island statute construed in this case was enacted in the light of a constitutional provision comparable to that of the United States; namely, "Private property shall not be taken for public uses, without just compensation.” The statute authorized the city of Providence to acquire land for a source of pure water and provided, among other things, (1) that the owner of any mill (such as a cotton mill) upon any land taken could surrender the machinery therein to the city within 6 months after the taking, and that the city would become liable to pay its fair value at the time of delivery, as part of the damages for the taking; or such special damages as might be suffered as a result of a compulsory removal before the passage of a reasonable time; or if the machinery were not surrendered, for the reasonable cost of removing it to a new location and setting it up anywhere within the New England States; (2) for payment of the fair market value of furniture and building equipment contained in any building belonging to the town of Scituate, which it might surrender; (3) for payment of the cost of additional police protection in any town or city in consequence of carrying on construction work; (4) for damages due to the decrease in value of lands not taken, but contiguous to lands taken; (5) for limited damages in certain cases for loss of employment due to the taking of the manufacturing establishment in which eligible persons were employed; and (6) for injury to businesses on land in certain localities which were established prior to the passage of the act.

The legislation was assailed on a number of grounds as contravening the provisions of the 14th amendment of the Federal Constitution. In rejecting all contentions, the Supreme Court said:

In respect of the contention that the statute extends the right to recover compensation so as to include these and other forms of consequential damages and thus deprives plaintiffs in error, as taxpayers of the city, of their property without due process of law, we need say no more than that, while the legislature was powerless to diminish the constitutional measure.of just compensation, we are aware of no rule which stands in the way of an extension of it, within the limits of equity and justice, so as to include rights otherwise excluded. As stated by the Supreme Court of Massachusetts in Earle v. Commonwealth, 180 Mass. 579, 583, speaking through Mr. Justice Holmes, who was then a member of that court: “Very likely the *

*** rights were of a kind that might have been damaged if not destroyed without the constitutional necessity of compensation. But some latitude is allowed to the legislature. It is not forbidden to be just in some cases where it is not required to be by the letter of paramount law” (pp. 676,

677). It may be noted that no State decision has been found which has denied the right of a State legislature to authorize the payment of moving cost or related losses or expenses for persons displaced from private property by public improvement programs. Many such statutes have been enacted in States having only "taking” provisions in their constitutions, as well as in States having “taking and damage provisions and it is difficult to conceive of a court holding that State legislation authorizing the payment of consequential losses or damages would be unconstitutional.

It will be recalled, that Congress has for a number of years authorized the administrative payment of moving and resettlement expenses. And in the Reclamation Act of 1902, Congress agreed to pay, though not required to do so by the Fifth Amendment, for water rights acquired under State law in navigable as well as nonnavigabe streams. As the Supreme Court said in its interpretation of the Reclamation Act:

* Whether Congress could have chosen to take claimants' rights by the exercise of its dominant navigation servitude is immaterial. By directing the Secretary to proceed under the Reclamation Act of 1902, Congress elected not to


in any way interefere with the laws of any State * * *
lating to the control, appropriation, use, or distribution of
water used in irrigation, or any vested right acquired there-
under” (32 Stat. 388, 396).

We cannot twist these words into an election on the part of Congress under its navigation power to take such water rights without compensation. In the language of Mr. Justice Holmes, writing for the Court in International Paper Co. v. United States, 282 U.S. 399, 407, Congress “proceeded on the footing of a full recognition of (riparians'] rights and of the Government's duty to pay for the taking that (it) purported to accomplish.” We conclude that, whether required to do so or not, Congress elected to recognize any State-created rights and to take them under its power of eminent domain (United States v. Gerlach Live Stock Co., 339 U.S. 725, 739 (1950)).



Congress clearly has authority to give Government agency heads broad discretion in the administration of public programs. As the Supreme Court has said:

* * * Congress has wide discretion in the matter of prescribing details of expenditures for which it appropriates must, of course, be plain. Appropriation and other acts of Congress are replete with instances of general appropriations of large amounts, to be allotted and expended as directed by designated Government agencies. A striking and pertinent example is afforded by the act of June 17, 1902 (ch. 1093, 32 Stat. 388), where aủl moneys received from the sale and disposal of public lands in a large number of States and territories are set aside as a special fund to be expended for the reclamation of arid and semiarid lands within those States and territories. The expenditures are to be made under the direction of the Secretary of the Interior upon such projects as he may determine to be practicable and advisable. The constitutionality of this delegation of authority has never been seriously questioned. See United States v. Hanson, 167 Fed. 881, 884-885 * * * (Cincinnati

Soap Co. v. United States, 301 U.S. 308, 321–322 (1936)). See also Lichter v. United States, 334 U.S. 742 (1948); Yakus v. United States, 321 U.S. 414 (1944); McKinley v. United States, 249 U.S. 397 (1919).

The Supreme Court's rulings in Panama Refining Co. v. Ryan, 293 U.S. 388 (1935), the “Hot Oilcase, and Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935), the “Sick Chicken” case do not control congressional delegations of authority to a regularly constituted administrative agency. As it was stated in 1 Davis, Administrative Law Treatise, sec. 2.01, p. 76:

In only two cases in all American history have congressional delegations to public authorities been held invalid. Neither delegation was to a regularly constituted adminis

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